Rise Noted In British House Prices

Property values increased over the course of June, the publication of a new set of figures shows.

According to findings from Communities and Local Government (CLG), the average home rose during the month to £214,222, compared to the £210,793 noted in May. As a result, year-on-year inflation was reported to stand at 12.1 per cent, up from the previous figure of 10.8 per cent.

Meanwhile, the findings also revealed a potential increase in financial difficulty for prospective first-time buyers. Over June, the house price inflation rate for those looking to take their initial steps on the housing ladder rose by 1.5 percentage points to 12.4 per cent. During the same period in 2006, a rise of 0.5 per cent was noted. As a result, £164,755 was the typical price paid for a home by such consumers. On the other hand, existing homeowners have seen the cost of property increase by 1.7 per cent in June - more than quadruple the growth seen during the same period in 2006.

Across Britain, London was reported to have particularly driven price growth, as annual inflation in the city surged by 17.5 per cent as the average home in the capital now costs £332,009. Meanwhile, the south-east of England saw increases of 10.7 per cent, while the east and the Yorkshire and the Humber region each posted growth of 9.6 per cent.

Conversely, the West Midlands was shown to have the lowest rise at seven per cent. In addition to London, the south-east, east and south-west were shown to be the most expensive areas to buy property, as the average house across Britain costs £221,370, however those living in the north-east are reported to face typical costs of £148,992.

Meanwhile, homes in Northern Ireland now command an average price of £240,302, after rising by 55.9 per cent over the last 12 months which could indicate an increased difficulty among homeowners in the area to make secured loans repayments. Findings from the government department also showed that house prices in Wales and Scotland are roughly the same at £165,119 and £160,363 respectively.

Commenting on the figures, Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors, said: “Although house price inflation accelerated more than expected in June, recent interest rate rises will gradually sap momentum from the residential property market. London house prices continued their particularly strong run, but the latest round of turmoil in financial markets does raise a question mark over whether this stellar performance from the capital will continue.”

Mr Rubinsohn added that although a rising proportion of homeowners are set to feel the “pain” of increased borrowing costs, “labour demand will remain generally firm helping to support a soft landing for residential property” as he claimed that employment will be “key” for the future of the housing sector.

Despite the CLG figures, a recent study released by Rightmove showed that house prices rose over the course of last month. With growth of 0.3 per cent, the smallest rise noted thus far in 2006, the average home was now reported to cost £240,000. According to the company, the curb in growth was due to, in part, the Bank of England rising interest rates, with the most recent increase taking place earlier in July.

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